The Insure Our Future network cautiously welcomes the UNEP Net Zero Insurance Alliance’s (NZIA’s) ‘Statement of commitment by signatory companies’, but calls on the NZIA founding members – AXA (NZIA Chair), Allianz, Aviva, Generali, Munich Re, SCOR, Swiss Re and Zurich Insurance Group – to demonstrate this commitment by immediately excluding new oil and gas production from their underwriting.
Positively, the commitment states that signatories commit to transition all operational and attributable greenhouse gas emissions, including their clients’ Scope 1, 2 and 3 emissions, from their (re)insurance underwriting portfolios to net zero in line with 1.5C.
“The NZIA commitments clearly recognises that the real influence of (re)insurers lies in what they do and do not underwrite, even more so than their investments. Insurers and reinsurers know what needs to be done, now they just have to do it. They need to stop underwriting coal and new fossil fuels projects and they need to phase out existing cover in-line with meeting the 1.5C target.”
“It is positive that insurers are willing to take the lead in fighting climate change, however the key steps to stay within a limit of 1.5°C global warming, such as ending all insurance coverage to fossil fuel expansion, are missing and left to individual (re)insurers. In particular, it is concerning to see that no minimum requirement on coal underwriting has been set to join the NZIA, whereas all founding members have already committed to stop insuring such projects."
“Allianz, AXA, Munich Re and Zurich, four out of the eight founding members of the NZIA, are among the top 10 oil and gas property and casualty insurers internationally. These NZIA founding members need to now make a commitment not to underwrite any new oil and gas projects. We call on them to show climate leadership and exclude underwriting of new fossil fuels as soon as possible.”
“We are in a climate emergency and what we need is urgent action, not heavily caveated statements. We hope that the NZIA will have a positive effect, but in the meantime we will continue to measure companies', including all NZIA members, commitments by their published policies and their actions.”
The NZIA statement notes that achieving its net-zero ambition is dependent on action by insurance and financial sector regulators and supervisors, amongst others. Insure Our Future echoes that call and highlights the need for better regulation of the re/insurance sector because the sector is both exposed to and exacerbates the significant financial risk from climate change, and it is not moving fast enough voluntarily to reduce its climate impact and its related systemic financial risk.
Notes of caution:
The underwriting criteria to achieve the 1.5C limit is left to the companies’ discretion, and signatories can report progress ‘in whatever form and detail they consider appropriate’. If this discretion is abused, insurers could seriously undermine the effectiveness of the initiative at a moment where leadership is highly needed.
While the commitment references the recent IEA net zero report, it fails to explicitly adopt its main conclusion that the development of new oil and gas resources are incompatible with the goal of limiting global warming to 1.5 C°. Further, the metrics to base specific individual company targets upon will ‘be defined within eighteen (18) months of the official launch of the NZIA’. Metrics are important, but should not delay the urgently needed action, like excluding insurance of new fossil fuel projects.
Insure Our Future published its demands to re/insurance company CEOs earlier this year in six bullet points that detail clear specific actions that should be taken as a matter of urgency.